Everette Family Wealth Blog

Most millionaires did not get wealthy from an inheritance, business idea or a time stock investment; instead they saved and lived below their means. Saving and refusing to use money isn’t always easy, but it can be mechanical. 12% directly from your check to your 401K or to your savings account. On the other hand, controlling living expenses is an everyday battle.

You control some expenses while others are not really flexible. Your household utility bills are somewhat fixed. (Of course, you can minimize with a digital thermostat or energy efficient bulbs.) However, trips to Starbucks, gas stations, and fast food restaurants are not required.

Starbucks visits, or your favorite coffee snack shop, can easy be reduced if not eliminated. Fix your own coffee at home for less than 50 cents a cup. It may limit your options, but you can still have iced coffee or flavored coffee. Unfortunately, you just lose the ambiance of waiting in line. Another option is to wait until you get to the office where there is usually free coffee. Why pay $3 for coffee across the street if it is free in the office?

Filling your gas tank has become newsworthy again because of the outrageous cost to refill. Nowadays, it costs over $50 to refill an empty tank, and that is a milestone that most people want to avoid. Drive less, car pool or combine multiple stops into one trip.

• I commute on the Chicago EL with pre-tax money. Some companies offer this as part of their benefits package. Just commuting, or carpooling, twice a week will substantially reduce your monthly expenses.
• Carpooling is only easy if coworkers live in the area, but is a good option to reduce costs.
• Combining multiple stops makes your more efficient and spend a little less. On Sundays, Courtney and I plan our household shopping itinerary for the next two weeks. We start at Target for bulk items, proceed to Whole Foods for groceries, and visit Home Depot or Best Buy if needed.

Meals will always be a significant household expense. The ability to minimize this cost requires a degree in Planning, Economics, and Culinary Skills. The goal is to eat out less, eat healthy, and to maxmize your time outside of the kitchen. Our plan starts with a list and the grocery store. The list keeps us from forgetting anything and controls emotional spending. The grocery store choice helps us get healthy food and a wide range of items.

We love produce, so we usually buy lots of fruits and vegetables. Courtney creates a myriad of snacks that are quick and healthy. For instance, last Sunday, we had chips and mango salsa. The Sunday before last, we had sliced apples and peanut butter. While these snacks are easy and inexpensive, they also help your heart.

Living below your means is a lifestyle choice. You either regularly shop at a grocery store or your dine out three times a week. You carpool or drive solo. One way requires planning and foresite. Lack of planning is not a good reason to lose $150 a month. Make the shift and plan to stop losing money today.

According to James Hughes, family wealth depends on several factors including financial capital, human capital and intellectual capital. Intellectual capital can build through each generation and may be the cheapest to obtain. So here are five steps to increasing family intelligence:

1. Communicate Family History
Every family member should know where they came from and how this history shapes their lives. Past achievements, career endeavors, and military service each reveal a thread of continuity between generations. The ritual of telling stories about great-great-grandparents needs to continue in order to create a clearer family history.
To Do:

• Ask your parents questions such as “who influenced you?” and “what do you remember about your grand parents?”
• Tell your children these stories and stories about you and your siblings.

2. Foster Family Cohesion
Family closeness will help bring about a sense of purpose. Each new generation will see they continue the mission of the previous generation. Of course, it may not be a clear cut generation but it should represent progress. For example, six out of 12 of my aunts and uncles finished college, but my siblings and I all finished college.
To Do:

• Make visits to your grandparents, aunts, uncles, and cousins routine during holidays or the summer.
• Go to family events such as reunions or milestone birthday celebrations.

3. Focus on Education.
Schools, museums, and learning adventures provide outlets to discover interesting hobbies, majors, and careers. Good schools will help your kids learn more, and they will also create a strong network of young achievers and explorers.
To Do:

• Visit a museum or aquarium annually.
• Make sure encourage learning at school by taking an active role in your child’s projects or homework. (You can show them the real world applications.)

4. Become an Expert
Pick a career or trade that is challenging and caters to your strengths. You should become an achiever in your field. As an achiever, you will be valued at your company and in your field, and you will be compensated for your expertise. That is, you will get paid well for doing what you love.
To Do:

• Rate your level of expertise on a scale from 1-10.
• Read related articles, books, journals to help determine what else you can learn and master.

5. Share Your Expertise
By sharing your knowledge with your family, you create a network of referrers and clients. They know you are good, and they may want to follow in your footsteps or accomplish the same in a different field. The Rothschild family gained its wealth by starting five banks in five countries with five sons. The key to their success is they shared information and converted that information into an asset. They capitalized on their intellectual capital and became industry leaders.
To Do:

• Explain what you do to your parents, siblings, aunts, uncles, and cousins.
• Participate in bring your children to work day.

Since the technology boom in the 1990’s, we often hear stories about the 25 year old guy that has created the latest Internet company and is now worth millions, if not billions. (The latest is Mark Zuckerberg’s Facebook web application.) Not everyone makes millions; some lose money, and others make a couple of thousand. But obviously the greatest surefire way to create wealth is to build a successful company from scratch.

A business can offer a high rate of return. It could be a neighborhood success like a hot dog and lemonade stand. The company could be a city-wide success like a creative pet hotel. If it gets national attention, the business will make tons of money as long as you can handle the pressure of growing pains.

The beauty of your own business is you can make it a family operation. You can teach your kids real life economic lessons that most won’t get to experience until their first jobs or business school. Regardless of if they stay with the family company, they learn plenty of invaluable lessons that will give them a lead against their peer group. And of course if they stay, the family business will not skip a beat when passed to the next generation of leaders.

Freelance

The next best thing is a side business. If you can do a job outside of your regular business, you can really increase your wealth and investment opportunities.

For instance, Courtney can freelance as a consultant to other psychologists. They pay her to test their clients and score the results. One benefit is she works a few hours for generous pay according to her schedule. So sometimes they call but she can’t work the job. Sometimes she can. The flexibility allows for a good balance between work, freelance, and home life. The other benefit: Courtney becomes extremely proficient in her field creating an opportunity to have a full-time consultant business. The business would have great potential because she would start with a reliable client list.

Pursue your options. Starting your own business is not for everyone. It won’t make everyone rich. But it will provide insight into just how creative and marketable your career can be.